What's this Buffet Rule that I'm hearing of in US?

@a4architect,

Have you by any chance read any of the articles a certain Mwarang'ethe has been posting on Kumekucha?

If not, have a look, especially at this one and this one.

@Ash Ock thanks for the link. I have read it. Mwarangethe is a very brilliant philosopher-the kind that Kenya needs to nurture/utilise.

He has explained the Land Value tax with a philosophical flavour.

I have explained the same thing with an architectural/real estate flavour.

Looks like the CoE eventually listed to him but were not bold enough to add the finer details. They left this task to the Land Commission.

The constitution says;


This is the core of the Land Value tax system.
It also says as regards to the Land Commission's role:


He explained Zimbabwe method of redistribution. I tend to agree with him that redistribution does not help the economy as much as the Land Value tax system coz the redistributed land can still be held vacant by the owners.

@
Land rates are tax on land. The difference is that Land Value tax is based on the maximum value that the land can attract hence higher than land rates. Land Value tax also varies depending on the zone.

This value is high and in essence, all other taxes such as VAT and Income tax should be abolished and only this method used to collect tax.

@jerry..import duty is debatable.

It can be seen as causing an increase in cost of goods hence lower productivity unless if the imported goods are not directly competing with Kenyan produced ones.
I quick rough calculation on the amount of tax from Nairobi City alone comes to kes 600B. See here

http://www.a4architect.c...-annual-land-value-tax/

This amount is alot so Govt doesn't need to look for money elsewhere unless when very necessary e.g as a barrier to competition or to prevent capital flight in the case of international corporate taxes.

@jerry..welcome

most importantly a nation that sustains itself in food and money for infrastructure.

All the idle farm lands will be worked to produce food and employment and all the idle town lands would be constructed on to create employment and fund the treasury.

From this calculation here

http://www.a4architect.c...-annual-land-value-tax/

Nairobi can be self-sustaining in funding.
There will be no need for the Worldbank/IMF dependency.

@jamplu..this is just my proposal to Kenyans in the hope that Govt can adopt it.

In my proposal, the elderly,sick and other marginalized groups can be exempted from tax on their residential house lands.

All others should pay the land value tax.

@jamplu.. true
speculation results to price of land increase. This increase in turn leads to more speculation. In a situation like in the US, banks exaggerated the situation by availing unsecured mortgages which in turn led to higher land prices until the burble burst.

Isn't the same effect expected if we tax land? The landlords will simply pass the cost as increased rent!

@l olest

The net result is over supply of housing hence rent reduction. The rent will initially be increased but in the overall long run, reduced due to over supply of houses.

Land taxation is already being levied on land owners in the form of land rates.

However, the land rates system currently being used in Kenya differs from the Land Value Tax because our rating system is based on the unimproved value of the land i.e the value of bare land while in Land Value Tax it is based on an expected income valuation of the land.

Now this is a great idea but it has its demerits. For instance, if fully implemented, it could lead to massive landlessness on the part of the poor if they cannot raise the taxes required on their land.

Secondly, it will contribute massively to inflation. Landlords will seek to pass the costs down to their tenants who will then adjust the prices of their products. In the case of agricultural lands, farmers who are hard pressed to raise taxes will raise the prices of farm produce.

This will easily be a method of wealth re-distribution. Not in the populist way in which we know it(rich to the poor) but from the poor to the rich.

The political will needed for such a move would be great. It would face opposition from the civil society and the other noisemakers who would seek to lecture Kenyans on how Kenyans are over taxed.

The comparison of land tax and income tax is wrong. Income taxes such as PAYE and corporate tax are taxes on the rewards of factors of production(wages and profit) while land tax is a tax on the factor of production, not on its reward(rent). I can only compare LVT with poll tax!

But is it all evil? Such a system I believe may lead to increased agricultural production as landowners with inability to produce maximum benefit from the land will be edged out and that land will be taken by farmers who are able to produce with maximum efficiency. This could also assist stem the current land fragmentation problem in agricultural areas.

@a4architect has mentioned the effect on land in urban areas. More buildings and better land utilisation would be expected.

Let's not forget the issue of new county governments. They will need funding, and this is one good avenue for them. The new constitution allows them to raise revenues this way.

Let the debate continue...